How Much Does Google Ads Cost? Here’s How To Create Your Budget

Investing in a PPC platform like Google Ads can have a huge impact on your business.

In fact, according to Google, the average advertiser on their platform makes two dollars for every dollar they spend.

That means the majority of people on the platform are doubling their investment.

It all sounds nice in theory, right?

But how much does Google Ads cost — and more importantly, how do you come up with the initial capital needed to advertise on Google?

Here’s how to calculate your Google ads budget so that you don’t end up swimming in a sea of debt.

Most marketing activities are costly and can deplete your budget fast.

You can’t afford to have that budget go to waste either.

Misusing your budget can lead to a wasted expense that only generates a few, low-quality leads.

But if you’re too hesitant to jump off the deep end, you’re probably also losing out on sales.

Every second you aren’t advertising on Google Ads is another second that you’re not doubling your ROI.

If you don’t know how much Google Google Ads can cost, you might be in for a surprise (good or bad).

How Much Does Google Ads Cost?

Depending on your industry, keywords can be extremely cheap or grossly expensive.

And if you’re targeting high-volume keywords with tons of monthly searches, you could be paying a pretty penny for that traffic.

One of the biggest mistakes in launching a PPC campaign is failing to do the proper research before jumping in.

Based on your industry, you could be paying anywhere from 19 cents a click to over five bucks.

But even within each industry, there are huge variations in keyword costs and average costs per click.

How much does Google Ads cost? It depends on what you’ll be advertising.

To get some deeper data, you need to research individual keywords that your business is likely to target.

How To Calculate Your Google Ads Budget With Keywords

Calculating your budget means first figuring out what that budget needs to be.

Open up SEMrush and start by searching for terms related to your business.

If you’re not sure of which keywords to search for, try brainstorming what people usually search to find your business.

For example, do you run a flower shop? If so, people likely search for “local flower delivery” or “local florist.”

If you still can’t think of anything, you can also use the keyword planner in Google Ads for free.

Head to your account and open up the keyword planner:

From here, select the first option from the list:

Now, you can enter your homepage or a landing page (if you have one) to get keyword ideas based on your site:

Search via your landing page, and you’ll get a targeted list of keywords.

Now download that list and head back to SEMrush.

Search for these keywords directly in the tool, and you’ll get tons of valuable data on cost per click:

If you scroll down further, you can see related keywords with their cost per clicks as well:

Repeat this process for 4-5 different keywords and make sure to jot them down in a spreadsheet.

Make sure you include the following in your spreadsheet:

Keyword

Volume (how many searches per month)

CPC

This will help you do some basic math that’s needed to decipher a budget.

Once you have a few keywords in your spreadsheet with their respective volume and CPCs, you can calculate your costs.

According to WordStream, the average click-through rate across all industries on Google Ads is 1.91%.

Depending on your industry, you can take the average click-through rate and calculate how many clicks you’ll get a month based on the keywords you chose.

To do this, refer back to your list of keywords and analyze the volume.

For example, if you have a keyword and the volume is 1,000 searches per month, you could expect to get 19 clicks per month at the average CTR of 1.91%.

Here’s a formula to see how many clicks per month you’ll get on a specific keyword:

Keyword Volume * Average CTR for your industry = Clicks per month

Next, take the cost per click of that keyword and multiply it by the monthly clicks.

For example, if my keyword theoretically costs five dollars per click, I can expect to pay $95 per month for that keyword.

Here’s the formula to see monthly cost of a given keyword:

Clicks per month * cost per click = monthly cost for that keyword

Now simply repeat that process by using those two formulas for each keyword you want to target.

At the end, add up all of the monthly costs for each keyword to get an idea of how much your monthly budget will likely be.

Once you calculate this data, you’ll know how much money you need to set aside for your budget.

So, how do you come up with the money now?

Here’s a simple, actionable way to generate a budget from nothing.

How To Audit Your Google Ads Budget

Money doesn’t generate out of thin air, meaning you’ve gotta find some place to get money from. And if you aren’t looking to re-invest money into your business or take money from your bank account to do it, it’s gotta come from somewhere.

In all seriousness, if you don’t have any money left in the budget and can’t afford to take from your bank account, you have one option:

Auditing your existing budget to find any gaps or wasted spend that you can use.

You can do this in a few different ways.

Option 1. Measure labor costs and adjust from there

It’s not always as cut and dry as analyzing a concrete number like sales from X platform.

Remember: Time is money, too. Your time is the most valuable thing you have.

So if you’re spending 10 hours a week on social media campaigns, even cutting back by five could free up tons of room in your budget.

To calculate this, you’ve gotta take your hourly rate (if you pay yourself a salary or are on a salary, divide it in half to get your hourly rate) and multiply it by the number of hours you spend on a task.

Hourly rate * hours spent working on X task = cost of that task in labor

Let’s suppose that your hourly rate for salary or services is $50 and that you spend 10 hours a week on social media campaigns.

Cutting back five hours would save you $250 in labor every single week.

That’s $1,000 extra each and every month in saved labor costs/overhead.

Now you can use that extra time/money to invest in a new platform, like Google Ads.

Option 2. Trade one for the other

Another concrete way to generate a budget from thin air is by simply trading one platform for another.

But this isn’t always that easy.

The trick here is to analyze specific conversion data to see which platforms are taking up too much time and money with a low impact on your overall revenue.

For example, are you running email campaigns via a software that costs you $99 a month? What are the conversions like? What results do the campaigns get on average?

The goal here is to figure out where you can trim the fat. Where you can eliminate budget wasting efforts that aren’t driving sales.

If you can do that, you can free up room for Google Ads.

To do this, you need to start analyzing your conversion data.

If you have goals set up in Google Analytics, you can measure goal completions and costs:

If you don’t have goal values set up, you can still calculate your costs by using an average lead value:

Total revenue generated by closed leads / total number of closed leads

Using this, you can analyze how much value a given platform is generating for your business.

Is Pinterest generating three leads per month? Multiply it by your average lead value.

Now analyze how much money you’re spending on direct spend and labor on that platform.

Is the labor and direct spend more than the average lead value or total monthly revenue from those leads?

Dump the platform and use that money on Google Ads.

Option 3. Audit your tool costs

The last option is to conduct a quick audit of your existing overhead costs in the form of tools.

Most marketers will have a diverse toolset that they use. Keyword research tools, monitoring tools, social scheduling, and more. There literally is a tool for everything.

For example, I use dozens of tools on a monthly basis that cost money.

Now, if I needed room for my budget, I could probably cut a tool like Evernote out simply because it’s not essential to my business. I can take notes for free on it. I’ll just lose some functionality. But if that means getting to spend an extra $50 on Google Ads, it could be worth it.

Take a minute to concretely analyze how much these tools cost and what your monthly bills look like.

Try eliminating non-essential tools or ones that aren’t helping you convert users into customers and using that extra room to form an Google Ads budget.

Start Small And Double Down If It Works

Earlier in this post, I gave you an example of how much it would cost me monthly for a sample keyword.

It was only $95.

Meaning all you’d need to start on Google Ads is less than $100 in some cases.

That should be relatively easy to scrape up by using one of the three options listed above.

Contrary to popular belief, you don’t need a monster-sized budget to advertise on Google Ads.

Starting small is better in most cases, as it gives you less room for error.

If you’re setting a monthly budget of $1,000 on Google Ads right from the start, you have a ton of risk.

You’re new to the platform, and being new makes it much easier to blow your money without realizing it. But if you’re only investing $95, your risk is much lower.

The key with Google Ads is to start small and adjust your budget from there.

If you go all in too fast, you risk losing that money. If you start slow, you can adjust based on performance.

If campaigns are going well, you simply add more money because you’re making more money that you can reinvest.

According to Google, doubling your return on investment is the norm for advertisers on their platform.

Comments

Is that $2 of sales for each $1 invested or two dollars of profit? As Google wouldnt know the margin on what you sell then I suspect they are talking sales. So a $1 item sold will need to deduct $0.50 for advertising then the cost of the item itself. Nowhere near enough margin for physical product.

This article is sort of misleading. What you show is definitely valuable, if you are trying to understand Adwords at the most minimalist level.. Beyond this, taking practice into your own hands would show the account history and actual CPC. It’s worth noting, that your references, are 100% invalid. SEMrush, along with SpyFu, and even GOOGLE, have no clue what you are going to pay.. Some services might speculate the cost with year-end financials, or general volume report against first-page bid (first-page bid also isn’t a fixed rate of whatever it says..). This is a fact. I am not assuming anything. For a $40 keyword, says Spyfu, I pay anywhere from 6 CENTS, to 2 dollars. I receive many leads from this. I don’t really want to share my secrets of intuition and practice but other than mis-leading information this is certainly a practice everyone should get use to who uses Adwords. Forecast. Your. Campaigns. Learn enough about what you are going to do with your money (it’s probably not your money), and pretend like it’s your money. Play the stock market. Gamble* in Adwords. Adwords is a bidding game, and that bid is not based on keywords. It’s based on conversions. If you fail to meet your Quota you bankrupt yourself. Good luck!

I believe everything posted made a lot of sense. However, think about this, suppose you composed a catchier title? I mean, I don’t wish to tell you how to run your website, however what if you added a title to maybe grab a person’s attention? I mean How Much Does Google AdWords Cost? Here’s How To Calculate It. is kinda vanilla. You might glance at Yahoo’s home page and see how they write news headlines to get people interested. You might add a video or a related pic or two to grab readers excited about everything’ve got to say. In my opinion, it might bring your website a little livelier.

A point of order: it’s a little misleading to suggest that the “majority of advertisers double their investment” in PPC through Google and then mention an average figure. On average, the investment might be double, however there are a large number of advertisers who throw money at PPC and get absolutely nothing from it. In other words, there’s a large tail and small top and while the average is a doubling, the median (which is the important figure) is much lower or even negative ROI for the majority.

I understand what you are saying, but is it the same playing field for a niche industry? We are https://HerculesSLR.com and it is really hard to gauge the market as no one is in the digital realm. we’ve been tutored by Google through their call center, but it’s still hard to quantify. We followed your article but are still unsure about ROI. Is it supposed to be this vague?

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